ECONOMICS EOC/MILESTONES REVIEW GUIDE
FUNDAMENTAL ECONOMICS
 Define scarcity.
 Define and give examples of the factors of production
What does efficiency mean and why is it important? What is specialization? Give an example.
 Define and give an example of opportunity cost
 What is the production possibilities curve? What 2 things cause PPC to shift?
What does a point inside the PPC mean?
 What is a rational decision?
 Define the command, market, and mixed economic systems with regards to what, how, and for whom to
produce.
 Define private ownership, profit motive, consumer sovereignty, competition, and government regulation.
Explain the role of profit as an incentive for entrepreneurs.
 Define economic goals: freedom, security, equity, growth, efficiency, stability.
 Which goals do each system (Command, Mixed, Market) follow?
 Why does the government provides public goods and services, redistribute income, protect property rights, and
resolves market failures?
 Give an example of government regulation and deregulation. How does regulation and deregulation affect
consumers and producers?
 Define productivity:
 Define standard of living:
 Draw the circular flow diagram. Include: Resource (factor) and Product markets and the flow of goods & $
 Define medium of exchange. Why is having a medium of exchange important?
MICROECONOMICS
 Define the Law of Demand. What factors cause demand to shift? Draw a shift in demand (increase and
decrease).
 Define the Law of Supply. What factors cause a shift in supply? Draw a shift in supply (both increase and
decrease).
 Define price elasticity of demand and supply.
 What is equilibrium/market clearing price? Illustrate on a graph how supply and demand determine equilibrium
price and quantity.
 Draw on a graph how price floors create surpluses and price ceilings create shortages.
 Define the 3 forms of business organizations: sole proprietorship, partnership, and corporation. Name an
advantage and disadvantage for each type of business organization.
 Explain the different market structures: monopoly, oligopoly, monopolistic competition, and pure competition.
MACROECONOMICS
 Define Gross Domestic Product (GDP). How is economic growth measured?
 Label and Define the business cycle: peak, contraction, trough, recovery, expansion, recession and
depression.
 Define unemployment. How is unemployment measured? Identify and give an example of structural, cyclical,
and frictional unemployment.
 Define inflation, stagflation, and Consumer Price Index. How is inflation measured? Give examples of who
benefits and who loses from inflation.
 Define aggregate demand. What shifts AD? Define aggregate supply. What shifts AS?
 How is the Federal Reserve System organized? Define monetary policy.
 What tools does the Federal Reserve use to promote price stability, full employment, and economic growth?
Easy money policy / Tight Money Policy
 Define fiscal policy. Explain the tools the government uses to influence the economy. Expansionary Fiscal
Policy / Contractionary--Restrictive Fiscal Policy
 What is the difference between the national debt and deficit
 Define and give an example of: Progressive, Regressive, and Proportional tax. How does an increase in sales
tax affect different income groups?
INTERNATIONAL
 Define Absolute Advantage and Comparative Advantage. When does most trade take place - absolute or
comparative advantage?
 What is the difference between balance of trade and balance of payments?
 Define and give examples of: Tariffs, Quotas, Embargoes, Standards, Subsidies
 What is the purpose of: EU, NAFTA, ASEAN?
 What are the costs/benefits of trade barriers? Why is free trade good/bad?
 Define exchange rate. How do you convert: USD into foreign currency? Foreign currency to USD?
 Explain why, when exchange rates change, some groups benefit and others lose. Explain what happens when
a nation’s currency is strong and when a nation’s currency is weak.
PERSONAL FINANCE
 Compare services offered by different financial institutions.
 Explain reasons for the spread between interest charged and interest earned.
 What is the difference between the interest charged on loans and the interest charged on credit cards?
 Give examples of the direct relationship between risk and return.
 Evaluate a variety of savings and investment options; include stocks, bonds, and mutual funds.
 What factors affect credit worthiness?
 What is the difference between simple and compound interest rates?
 Describe the different types of insurance: automobile, health, life, disability, and property.
 Describe the following costs and benefits associated with insurance: Deductible, premiums, shared liability,
asset protection
 How does the investment in education, training, and skill development help someone in the workplace?